Costa Rica real estate: ☎️ What types of property ownership are there?
There are different ways to own real estate in Costa Rica. You can choose which one serves you best. Owning land in Costa Rica is a great idea since this is such a beautiful and peaceful country. The province of Guanacaste has the best beaches in the country, in my opinion, and is a great place for property ownership. As a real estate property owner, you can use and enjoy, improve, transform, mortgage and sell it. In other articles, I have covered due diligence before owning and all you need to know about property transfers. So now, it´s only logical that I give you some insights, as an attorney, on how you can own a property or a home in Costa Rica.
Personal land ownership:
This is the best option for ex-pats to own land in Costa Rica. When you buy the property, you must ask the notary public to place it in your personal name. Once it´s duly registered, you will get your title, stating the property is yours. The Public Registry of Costa Rica issues this title.
Owning real estate in your name has many benefits. First, it will be transferred securely to your heirs upon death, per your last will. I think this is a very secure way of property ownership in Costa Rica, and I discourage using corporations as holding companies. Own the property in your name; you will get your title and legal security.
Real estate ownership through co-ownership:
This is a good option if you are a married couple or wish to marry in Costa Rica. If you want to buy land or own a home, co-ownership is the best way to do this. Both of you will be land owners in your name. However, your ownership rights are not localized, so you own the “ideal property”: the property is undivided, and both of you own it, but as a whole.
Co-ownership has many benefits, especially if your marriage ends in divorce. In that case, you don´t have to ask the judge, through lengthy procedures, to divide the marital asset between the both of you. You already did it! Both of you own 50% of the land. All you need to do is file an action to have the judge “localize your right,” and it´s done. If the property is indivisible, you can request a public auction to have it sold, and each of you gets 50% of the proceeds.
Property ownership through a corporation:
Let me be clear: if you buy a property through a corporation, you don´t own it; the corporation does. So it´s unnecessary to incorporate to own a home or real estate property in Costa Rica. You can own it in your name or through co-property with another person.
However, having a corporation has its benefits. You can avoid probate procedures by simply endorsing shares to your heirs when you wish. The corporation is not liable for what you do personally, which is also a plus. However, corporations should be used to operate a business, not to own your assets, which should be placed in your name. To own a home in Costa Rica, as a couple, but in a corporation, is a big no-no in my book. It´s best to own real estate in co-ownership. In the case of a divorce, you will thank me.
Own property though a trust?
An interesting way to own a condo in the beach, is through a real estate trust. When the development is established in the restricted area, the land can only be enjoyed through a concession. The idea is to request the concession in the name of a corporation, and fully develop the land for housing. What people usually buy, are special titles on the land, given by the corporate structure that has the concession.
Life Estates: an interesting option of property ownership:
A life estate is what we call an “usufructo” in Spanish. It comes from the Latin “usufructus,” a combination of the words: use and fruit. A life estate is a right to enjoy, use, and perceive the “fruits” of an asset. If you have the usufruct of a property, you can use it, enjoy it, live on it, and perceive its civil fruits: such as money from its rents. If you have the usufruct of a property, then you can rent it and perceive the “fruits” of this contract, which would be the rent.
When you wish to pass the property on to your heirs in your lifetime, this is an exciting figure you should consider. The property is transferred to them, but it will remain with an encumbrance in the Public Registry: a right of usufruct to you. This right can be stipulated for the remainder of your lifetime. So basically, your heirs own the property, but for the rest of your lifetime, you can use it, live on it, rent it, and enjoy it. As usual, a public notary is necessary for this, one that you trust to do this properly. You should always have everything double-checked, by an attorney at law in Costa Rica.
Dr. Christopher Pirie Gil.